Common Issues for Charity Trustees

Most charities are run by well-meaning and delightful people, who are dedicated to their own charity. As a result, they are frequently more tied up with what the charity does, rather than taking a broader view of their responsibilities. 

Difficulties can sometimes arise as a result of this apparent 'blind spot'. Some of the more common ones that we encounter are:

• Correctly requiring cheques to be signed by two people, but then signing cheques in advance because it's more convenient where one signatory is not always around to sign;
• Allowing family, friends or children to use charity assets, without agreeing this with the other trustees and declaring their interest;
• Failure by some trustees to read the governance documents or the accounts. As time goes by, the charity changes what it does without changing its Objects, so that the trustees’ actions are in breach of trust. The trustees then become potentially personally liable for any monies spent on the new Objects. It's easily done and trustees should examine their Objects from time to time to make sure they are still doing what it says on the tin;
• Making sure that all the charity’s documentation carries the charity's registration number. If in doubt, put the number on everything: cheques, notices of meetings, letterheads, newsletter emails, and website, amongst others.
• If the charity is selling property, taking a loan, overdraft facility, obtaining a grant or investing funds the proper procedures must be followed. They are all set out in the Charities Act 2011 and are quite complex, so professional advice is a must. A failure to observe the requirements might mean the transaction is void and the trustees might incur personal liability.

This is by no means an exhaustive list of everything we come across, but to make sure your charity is doing things properly, interrogate the Charity Commission web site. It is full of really useful information, much of it included in their guidance, which covers topics such as 

• Trustee's role and the board
• Charity money, tax and accounts
• Managing your charity
• Staff and volunteers
• Fundraising
• Setting up a charity

Fieldings Porter has advised many charities over the years from national charities, private schools to local communities and everything in between. If you run a charity, are thinking about setting one up or have been asked to become a trustee, speak to one of team to make yourself aware of what's involved.